Asia Stocks Edge Up After Gold, Silver Tumble: Markets Wrap

(Bloomberg) — Asian stocks stabilized after an early tumble in precious metals Monday as traders wagered Friday’s strong employment data will move the Federal Reserve closer to pulling back stimulus.

Shares rose in Hong Kong and China and fluctuated in South Korea. U.S. futures dipped and Japanese markets are closed for a holiday. In a brief selloff at the start of Asia trading, gold touched the lowest since March before paring losses. Silver dropped to its lowest since November. The prospect of higher rates makes precious metals less attractive relative to other assets. Crude oil extended last week’s decline — its worst since October — on concern the delta virus strain will hamper demand growth.

Read: Gold Tumbles With Silver as ‘Panic’ Selling Grips Asian Open

The dollar was steady. On Friday, data showed U.S. job growth accelerated in July by the most in almost a year and the unemployment rate declined, illustrating momentum in a labor market grappling with hiring challenges.

The U.S. 10-year Treasury yield climbed to about 1.3% Friday. Cash Treasuries won’t trade in Asia because of the holiday in Tokyo. Chinese bond yields gained after inflation data came in above expectations.

The U.S. jobs report fanned expectations the central bank will start to cut back stimulus as it wrestles with above-target inflation even as delta spreads. Dallas Fed President Robert Kaplan added to the speculation Friday, saying he’d support adjusting purchases soon but in a gradual manner.

U.S. inflation data this week will be a key marker for investors trying to gauge how acute price pressures are, ahead of the Jackson Hole symposium later this month.

“You have these concerns that if the economy is growing very, very strongly then that might bring forward the tightening or the tapering by the Fed,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, said on Bloomberg Television. “There is a good chance they might announce that tapering in September and it would start later this year.”

Traders are also keeping an eye on the progress of the vote on the $550 billion U.S. infrastructure package. The bill cleared its last procedural hurdles in the U.S. Senate Sunday night, setting up a vote on final passage as soon as Monday.

On the virus front, Anthony Fauci, the U.S.’s top infectious-disease doctor, said he’s “strongly in favor” of speeding booster shots to people with weakened immune systems, a further sign of how the delta variant continues to shift the strategies for curbing the pandemic.

Elsewhere, Chinese technology shares remained under pressure amid concerns about Beijing’s crackdown. Chinese chip makers slumped after state broadcaster CCTV said in a commentary on Friday that regulators will show no tolerance in cracking down on speculators amid a supply shortage.

Bitcoin traded near $43,000 after hitting the highest since May over the weekend.

Here are some key events to watch out for this week:

Atlanta Fed President Raphael Bostic; Richmond Fed President Tom Barkin; Cleveland Fed President Loretta Mester; Kansas City Fed President Esther George among Fed speakers through the weekThe U.S. consumer price index on Wednesday is forecast to show prices increased again in JulyOPEC Monthly Oil Market Report due Thursday

For more market analysis read our MLIV blog.

These are the main moves in markets:

Stocks

S&P 500 futures slid 0.2% as of 12:52 p.m. in Tokyo. The S&P 500 rose 0.2%Nasdaq 100 futures dropped 0.3%. The Nasdaq 100 fell 0.4%Australia’s S&P/ASX 200 Index rose 0.1%Kospi index was little changedHang Seng Index rose 1%Shanghai Composite Index rose 1%

Currencies

The Japanese yen was little changed at 110.22 per dollarThe offshore yuan traded at 6.4758 per dollarThe Bloomberg Dollar Spot Index was flatThe euro was at $1.1760

Bonds

The yield on 10-year Treasuries advanced seven basis points to 1.30% FridayAustralia’s 10-year bond yield rose about four basis points to 1.23%

Commodities

West Texas Intermediate crude fell 2% to $66.94 a barrelGold retreated 1.4% to $1,738.91 an ounce

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